From The Australian. Here's what's on the front. I'm christinamiot. It's Monday, May thirteenth. Pay us more or prepare for a shutdown. That's the warning from the Australian Federal Police Union. They're threatening to walk off the job if the government doesn't come to the party on pay and conditions, and that could leave airports, public premises and even Parliament House
without protection. You can read that exclusive story by workplace editor Ewan Hannon at The Australian dot com dot a U. A Chinese researcher based at a Queensland university has been fighting deportation for four years. The government wants Jolong Jou gone because of his alleged links to weapons of mass destruction. Court documents show the researcher is the fifth visa applicant
to be pursued by the government on similar grounds. Treasurer Jim Chalmers says he's got the balance right ahead of Tuesday's federal budget, but he'll break from the Reserve Bank's inflation forepasts and lean on consumers to do the heavy lifting and reduce spending in the second half of the year. So what's driving Jim Chalmers and what kind of budget
will he deliver? That's today's episode. The nineteen ninety six film Jerry Maguire opens with a scene in which the titular sports agent played by Tom Cruise, has what I guess you'd call an epiphany.
I began writing what they call a mission stepmen, not a memo, A mission stepan, you know, a suggestion for the future of our company. Night like this doesn't come along very often. I seized it.
Maguire makes copies of his mission statement and distributes them to every one of his colleagues in the middle.
Of the nighties. Even the cover looked like the catcher in a rye. I entitled it the Things we think and do not say, the future of our business.
They love it. Management doesn't how long you Jim?
About a week.
In the run up to his second federal budget in early twenty twenty three, Treasurer Jim Chalmers had a Jerry Maguire moment. He penned a six thousand word essay laying out his vision for the future of capitalism.
Well, my essay is all about how we strengthen our economy and strengthen our institutions in a way that strengthens our society and strengthens our democracy.
It was also his vision for himself writ large in taking up the mantle as Treasurer, Chalmers said he doesn't want to be someone who just occupies the office. He wants to enable major change, be a big time reformer. Now we've passed the halfway mark of Labour's term in government, the next election isn't too far off and Jim Chalmer's third federal budget will be handed down on Tuesday night. The question is if he's lived up to his own expectations.
I think this budget will be the most important that Jim Chalmers has brought down as Treasurer. It's important because the economic challenge is really significant.
Paul Kelly is The Australian's editor at large. He's been covering politics and federal budgets for fifty years.
But beyond that, it's the third year of the first term, so I think this budget is going to tell us more about the economic character of the government and of the Treasurer, and it's going to outline the essence of the future growth strategy for Labor which it will pursue over the next several years. He's a gifted communicator. As Treasurer, he's ambitious. He sees himself operating in the poor keeping mold.
He sees himself as a reforming treasurer. But his treasurer at a very diffu time, a time when the challenge of high inflation inhibits and constrains what the government and what the Treasurer can do. And the essence of this coming budget will be how Chalmers reconcile the economics with the politics.
Looming over all. This is the legacy of another former Treasurer and great reformer, Paul Keating.
Madam Speaker. Last year, the government paid back three thy seven hundred million of Commonwealth debt. This year we'll pay back even more. We'll be able to do so because tonight I am announcing a budget surplus of historic proportions.
Keating's been back in the news recently for his frank criticism of his labor colleagues, but he's been a mentor to charmers, even a bit of a hero. The Treasurer who's actually doctor Jim Chalmers wrote his PhD on Keating's leadership style. It was titled Brawler Statesman, a nod to Keating's feisty and ambitious politics. But Keating's day has long since passed and the economic, political and social landscapes are vastly different now.
Well, I think there's no harm in comparing them. And I think in one sense Jim Charmers invites us to compare them. I think that's probably not a smart thing for him to be doing, because Keating was treasurer forty years ago. It was a different world and it was a different challenge. And essentially Keating's reform credentials have been unmatched ever since, and I don't think they're likely to be matched by the current government, or frankly by Jim
Charmers himself. And in many ways he might privately agree with that particular point, but there's a deeper problem.
Their sense of destiny might match, but their agendas don't.
The Keeping agenda was all about creating a new sense of Australian based productivity, eliminating in the tariff, opening up the Australian economy, giving more emphasis to market forces, cutting taxes, empowering the middle class, deregulating the financial system. Now, that is an agenda of enterprise based innovation, relying on markets.
What we now see from the current labor government headed by Anthony Albanezi with a Charmers as Treasurer, is that there's a greater emphasis on government, on spending, on government intervention. We have a government directed new form of industry policy. We have a vast array of subjidies and tax breaks to encourage renewable energy and achieve the objective of a
renewable energy superpower. So essentially we've got a lot of changes which many people would call reform, and others, particularly a columnists, would say their examples of the country actually regress, relying much more on old fashioned government's vention in government spending. So I think that is the paradox of the Charmers Keeping relationship.
Jim Chalmers has been setting the scene for this federal budget for months now. A speech given at the Lower Institute in early May, he said this is the most challenging strategic environment since World War II, and he's not wrong. Inflation is creeping, growth is slowing, conflict is escalating, geopolitical tensions are rising, and climate change is accelerating.
I think what he's getting at and in this sense, is completely correct. But this is a very difficult economic environment for the government and the reason it's difficult is because inflation is still not mastered. Of course, a lot of progress has been made, but the last mile in terms of beating in flam has not yet been reached.
So essentially the problem that the treasurerffaces it's the problem between putting in place new expansive policies designed to define what this labor government stands for and help the Australian people on the one hand, and on the other hand the fact that fiscal policy has got to do something to assist monetary policy and contain inflation, and that means there's got to be a limit on how much you can spend. So that's the dilemma.
Coming up. Why Jim chalmers next move is less budget and more balancing act, Well, I've got you, don't forget. Subscribers to The Australian get first access to the best budget commentary and analysis. A subscription also unlocks newsletters and special events. You don't need to be the Treasurer to know it's great value. Check us out at the Australian dot com dot au. We'll be back after this break. Last week, Reserve Bank Governor Michelle Bullock sent Treasurer Jim
Chalmers a warning. She said the RBA would have to act if services costs and soaring petrol prices send inflation back up, and by act she means hike interest rates.
We're not ruling anything in or out because things are uncertain, but there is just the recent data of just indicated to us we need to be a little bit of vigilant on this.
The Reserve Bank's job is to set the cash rate. When it wants people to pump money into the economy, the rate drops. But when inflation is as high as it has been over the past year or so, spending is a dangerous game because everything gets more expensive as suppliers and service providers work to cover their costs. If that's allowed to go on for too long, those prices could stay that way. That's called stagflation. So the Reserve Bank does the only thing it can do. It raises
interest rates. So spending is diverted into mortgages and that's putting huge amounts of pressure on Australian households. So what Michelle Bullock is saying to Jim Chalmers in the nicest way possible is don't put too much money in people's pockets. Here's Paul Kelly.
I think the treasure will present the budget as a middle course budget, that is, it's an effort to strike a compromise between the economics and the politics. Cost of living will be uppermost in the budget speech of the Treasurer, and he's made it clear that assistance to people managing cost of living pressures will be substantial. There's going to be a lot for families, for pensioners, for students, for
young people, for ever industry, for older people. So the government will try and in that sense we'll look after the community. That's important. But on the other hand, he's
got to ensure that he doesn't spend too much. And I think what we're going to say about this budget when we see it on Tuesday is that with this budget, the treasure has taken political responsibility for any future increases in interest rates by the Reserve Bank, because we know that the more spending you have, then the more that puts pressure on the Reserve Bank to increase interest rates.
So the great danger for the Treasurer, the great risk for the Albanza government in this budget is that it's going to put more pressure on demand in the economy and that means if the Reserve Bank does have to increase interest rates again, that in political terms, is going to be sheeted back to the government. That's the risk, that's the gamble.
In other words, Jim Chalmers will be walking a tightrope on Tuesday night.
I think there are probably two fundamental factors which might define this budget historically. First of all, how will this budget be judged in terms of combating the central economic problem, which is inflation. Now we won't be able to answer that exactly on Tuesday night. The answer will emerge over the course of the next year or two. And I think the second fundamental criteria is that this budget will probably have a strong ideological component in terms of outlining
what labor stands for and what labor believes in. I mean, the interesting thing about the budget is the biggest single item in the budget in terms of quantum of money will be the tax cuts. But the revamp tax announced last January, so they're old news, but in actual fact they'll be the biggest single item in the budget. And that's another item which points to the question of the economic character of the government.
Peter Dutton will have his chance to respond to the new federal budget on Thursday, and Paul says the opposition leader has some work to do.
Too, So essentially what you see is you see a lot of pretty busy, almost panic work over the Wednesday and the Thursday from the opposition leader to sort out how far they go and the budget apply. This is what it's always like and it won't change this week. But the big question is what does Dutton say about what the Dutton leadership is about and what the Liberal Party stands for at this point in time. What will he say about policies, what will he say about tax immigrations,
about energy and so on? And this is almost the tactical dilemma that opposition leaders face with their Thursday night reply to the budget. How far do they go now? I think Peter Dutton's got to go some way. We haven't seen very much at all from the Liberal Party in terms of what they stand for in terms of their policy roll out. Now that's sensible in one sense
because oppositions never like to do that too much. But on the other hand, I think Dutton's got an obligation to give us something and that's going to be the issue. How much will he give us? We'll have to wait and see on Thursday night.
Paul Kelly is The Australian's editor at Large. The Front will be in Canberra for the Federal Budget tomorrow night, and you can follow our experts, reporting and analysis live at the Australian dot com dot au